Each year, countless people leave the UK for foreign shores, chasing a new life or career. Yet this break from Great Britain may not be clean in the eyes of HMRC, who could disagree with your ‘expat’ status.
Many non-resident Britons still face obligations when it comes to taxation, and must declare their earnings before the self-assessment tax return deadline rolls around (31 January 2018). However, HMRC currently make this difficult for expats, especially those that have missed the paper returns deadline of the 31 October.
It’s important to know whether you’re in this bracket, and how to submit your tax return if so. The last thing you want is an undeserved penalty fine.
Ticking Off The Criteria
Contrary to what you may think, British residents are not immediately exempt from home tax laws when they move abroad. It takes time to prove you’re leaving the UK and your residency status behind. How you earn, and where the cash stems from, are key questions that’ll direct your obligations.
For clarity’s sake, here’s a breakdown of HMRC’s criteria for non-residency:
- You’ve spent fewer than 16 days in the UK per year. This rises to 46 if you’ve been a foreign national for three years or more.
- Your main source of income is overseas, but you’ve still worked up to 30 days in the UK during any tax period. A day is classed as three hours of paid service/sales. Including those 30 working days, you’re allocated another 60 for leisure – the total time you spend on British soil cannot exceed 90 days.
- In addition to your residency status your liability to tax may also be affected by your domiciled status. The rules again can be quite complex, which makes a close look at the finer details essential.
You can check your residency status using this very helpful tool on HMRC’s website.
However, it doesn’t stop there. Even if you are classed as non-resident for tax purposes, you may still have some tax to pay if you have income in the UK, including:
- Any earnings you make in the UK via employment or self-employment.
- Investment income including dividends, bonds and bank interest
- Rental income from UK property
- Inheritance processed through a British-based executor
- Selling a UK property: new rules introduced in 2015 mean you may be liable to capital gains tax unless you have been non-resident for a minimum of five years.
But before you open your wallet, remember that some countries have a ‘double tax treaty’ with the UK. This essentially reduces the chances of you paying tax on the same income twice, both in the UK and your chosen country of residency. That said, the nature of the agreements can vary, so examine the rules carefully…
Submitting Your Self-Assessment Tax Return
As you can see, there are no quick answers to expat tax affairs. Whether HMRC holds you to the UK tax rules or not rests on a number of things, which can be difficult to assess without consulting an accountant.
SimpleTax, from GoSimple Software, solves these problems for you. It assesses your income over the tax year and builds a model of what you owe, where it comes from, and how obscure expat legislation can take effect. SimpleTax’s algorithms are constantly updated to reflect the state of UK expat law; furthermore, it can be used by anyone, anywhere in the world, since it’s a cloud-based web and mobile app.
Lastly, this software provides all the correct documentation that isn’t available through HMRC’s online calculator. As an expat, this means you can still submit your tax return after the 31 October, without the need for costly accountancy fees. Invest in it today, well before the 31 January deadline, to make sure you get on the right side of the financial fence.
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